Undervaluation under Chapter XX-C fails where non-comparable properties and inconsistent valuation assumptions undermine the acquisition order.

An order under Chapter XX-C of the Income-tax Act could not be sustained where the finding of undervaluation rested on non-comparable sale instances, inconsistent treatment of the existing building's salvage value, and undisclosed enhancement of that value without a stated factual basis. The Court held that comparison of dissimilar properties is impermissible, and that rejection of material comparables on irrelevant considerations is equally unsustainable. On the record, earlier valuation reports did not support undervaluation, so the High Court was justified in setting aside the acquisition order and the Revenue's challenge failed.

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Issues: Whether the order of acquisition under Chapter XX-C of the Income-tax Act, 1961 could be sustained when the valuation basis, the salvage value of the existing building, and the comparability of the sale instance relied upon by the Appropriate Authority were found to be flawed.

Analysis: The acquisition order was based on a comparison with another property, but the properties were not shown to be truly comparable in relevant respects. The valuation of the existing building on the subject property was treated inconsistently, and a substantially higher salvage value was relied upon in the final order than had been indicated in the show-cause notice, without disclosure of the factual basis for such enhancement. The material before the Court also showed that earlier valuation reports did not support any undervaluation, and the rejection of the relied-upon instance was founded on irrelevant considerations. A comparison of dissimilar properties is impermissible, and the failure to compare genuinely comparable properties is equally unsustainable.

Conclusion: The acquisition order could not be sustained, and the High Court was in setting it aside; the challenge by the Revenue failed.

Ratio Decidendi: An order under Chapter XX-C cannot stand where the finding of undervaluation rests on non-comparable instances, undisclosed or inconsistent valuation assumptions, and irrelevant rejection of material comparables.

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